What to expect from the first release of the Fed’s labor market conditions index

The Fed is set to release its labor market conditions index report on Monday, the first regularly scheduled release of the indicator. The LMCI is heavily dependent on the unemployment rate, which dropped below 6% for the first time in six years.

This index will take several different pieces of data surrounding the labor market and compile it into one number with the hope of providing a better outlook on the market than just that of the unemployment rate.

In a speech back in August, Fed Chair Janet Yellen called the LMCI a “convenient way to summarize the information contained in a large number of indicators.”

Experts at Bank of America Merrill Lynch say that a good number for this new index would be seven. They suggest however that come Monday, we could expect to see it sitting somewhere around five.

Seven would be “a sign of meaningful momentum in the jobs market,” the report reads. The level of the LMCI will be important as well as how it changes from month to month.

The Fed’s release of the index comes ahead of a when many expect them to begin raising interest rates, which Merrill Lynch suggest will be June.